tv Key Capitol Hill Hearings CSPAN March 21, 2015 1:00am-3:01am EDT
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distinguished ranking member senator from florida for his remarks and ask fcc commissioners if they could to find their remarks in three minutes to get to the question and answer which i think everybody is interested in. so welcome today oversight hearing. every day every single american relies on some part of our nation's vast communication system, the internet, telephone, television, gps or the radio. efficient effective communication system is the bed roc of our nation's economy and the tie that binds together our 21st century society. the fcc sits right in the middle of america's digital world. this is more true followed the fcc decision to turn or broad band internet infrastructure into a public utility. it is apparent from that action last month that the fc contraction is threatening an unpredictable agency that it struggle to operate designed
nearly 00 years ago and not seriously upgraded. nearly so 0 years ago and. to be clear today's hearing is not a response to the title 2 order but clearly no discussion about the fcc can ignore one of the most significant and most controversial decisions in the agency's history. my views on this subject are well known. i believe there should be clear rules for the digital road with clear authority for the fcc to enforce them. i put forward a draft bill with my house colleague to begin the legislative discussion of how best to put such rules into statute. like most first drafts with are our draft bill is not perfect. i invite members of the committee and stakeholders from across the political spectrum to offer us ideas so that the final draft can win bipartisan support and provide everyone in the internet world with the certainty that they need. the fcc's recent action accomplished the exact opposite. rather than exercising regulatory humility, the three majority commissioners decided to take the radical and
polarizing partisan path possible. instead of working with me own. my colleagues in the house and the senate to find a consensus, the three of you chose an option that i believe will only increase political regulatory and legal uncertainty which will ultimately hurt average internet users. your actions jeopardize the open internet that we're seeking to protect. there was one idea that unified them for nearly two decades. the internet is not the telephone nut work and you cannot apply the old rules of telecom to the new world of the internet. three weeks ago three regulators turned their backs on that consensus and i believe the internet and its users will suffer for it. the debate illustrates the importance of the fcc which makes it amazing that congress has not reauthorized the fcc. indeed it's the oldest expiration in this committee's
jurisdiction. a situation i intend to rectify in this congress. today's hearing marks the beginning to write and pass legislation to reauthorize the fcc. i know that contentious matters divide this committee but fcc authorization is an area where i believe republicans and democrats can and should work together. wanting the fcc to be an efficient regulator shouldn't a partisan goal. i know members on both sides of the aisle have common sense ideas to make the agency for responsible and i look forward to hearing their suggestions and views and i look forward to hearing the commissioner's thoughts today. about ways congress can help the agencies improve. writing a new fcc reauthorization bill should not be a one-off effort. it is my hope that the committee will get back to regularly authorizing the commission as part of its normal course of business. in order to do that effectively the committee must be diligent.
as such the commission should expect to come before this committee again. how the commission works is just as important is as what the commission does. in addition to discussing important communications policy matters, i hope members will use today's hearing to explore the commission's operations, processes and budget. for example, the fcc has requested $530 million for fiscal year 2016. this funding level would be the highest in the commission ears -- commission's history. that alone raises eyebrows particularly when american house holds continue to do more with less. but they want the fund the increase by raiding the universal service fund. paying for record high funds is a dangerous precedent. we may have varying differences, bun thing we can agree on is that its limited fund should not be used as a reserve fund to pay for the fcc's core statutory
functions. that's what the commission's regulatory fees are for. usf funds should pay for usf services. given the significant interest in hearing from the commission today, i do not expect this hearing will be a short one. in order to get to the member's questions i ask that all of the witnesses limit their oral statement to three minutes apiece. the longer written statement wills be submitted for the record. i look forward to hearing from your commissioners today in what i hope will be a productive afternoon. with that i would yield to my ranking member, senator nelson. >> thank you, mr. chairman. a few weeks ago everybody in this room today knows that the fcc responded to the dc circuit court and responded to 4 million americans by restoring essential protections for consumers and competition on the internet.
obviously there's going to be a lot of discussion today about the content and the development of those rules. and there will be much scrutiny on the legal justification that the fcc used to support its adoption of the rules. now, while those legal means are important, in fact, they are the statutory tools congress gave the fcc to perform its job. and we must not lose sight of the results of this rule making in terms of the protections that the fcc adopted. as this senator has said repeatedly, as i have discussed with the chairman, i remain open to a truly bipartisan congressional action provided
that such action fully protects consumers, does no undercut the fcc's role and leaves the agency with flexible forward looking authority to respond to the changes in this dynamic broad band marketplace, so much of which what we think we know today is often changed because of the rapidity of development of technology. many of you have heard me speak of title x as a yet to be defined title. and i use the term as a way to think beyond the rhetoric that has now engulfed this political argument. the key question for me is, we must ask how or is it possible to take what the fcc has done and provide certainty that only legislation signed into law can
provide. is it part? it is part of the larger debate on the appropriate role of the law and regulations in the broad band age. and as we have that broader discussion, i invite you, mr. chairman wheeler, to continue to work with us to craft the right policies to accomplish that goal. as important as the issue of net neutrality is to this nation, we should never forget the other vital work that is done by the fcc. with ongoing regulatory oversight over as much as one-sixth of our nation's economy, this agency plays a critical role in ensuring universal access and promoting competition and protecting
public safety and protecting consumers. the fcc recently closed the biggest spectrum auction in history, $41 billion. and funding the nationwide public safety wireless broadband network in providing $20 billion for deficit reduction. that's huge. and it's in the midst of planning for the voluntary broadcast television incentive auction, a new form of spectrum action that could fundamentally change the nation's spectrum policy. yet, we can't rest. and when it comes to spectrum, continued public and private technological development will continue to put train on us. congress, the fcc and the rest
of the federal government needs to work together to develop a smart forward looking spectrum policy and i certainly, this one senator will certainly try to help that effort. the fcc is also overseeing the ongoing evolution of the nation's communication networks, known as ip transition. one of the trial projects associated with ip transition is proposed in my state. i'm looking forward to an update on that. generally, i have concerns about how the ip transition might affect public safety. so we can get in that. and the fcc has done a lot to modernize its universal service fund programs, including expanding the e-rate program. what one of our senators has not been involved in e rate and
promoted. and this program provides critical support for our nation's schools and their libraries. the enhancements, the increased funding will help guarantee the nation's students have access to 21st century technology, not just some of the kids in this country. and i also appreciate the work that the fcc has done to increase the availability of affordable high speed broadband in rural areas around the country. i encourage you to redouble that effort to ensure there's not this digital divide that keeps going on, that urban kids get one thing and rural kids get another. i want to thank chairman wheeler and the fcc's staff on improving
the agency's consumer complaints department. senator udall and i sent a letter to the fcc last year asking them to upgrade the commission's consumer complaint website to make it more user friendly. and the chairman delivered. the new consumer complaint website is light years ahead of the previous system and i hope that we can continue to see the additional upgrades. i want to thank all of the five fcc commissioners for your public service. i want to thank you for subjecting yourself to five committee hearings -- no, eight committee hearings in five days. and mr. chairman, i thank you for the privilege of serving with you on this committee. >> thank you, senator nelson.
i share that. and we'll look forward to working tot on a lot of these issues in the days and weeks and months ahead. the colleagues on this committee on both sides of the aisle, important work to be done. we're going to start by hearing from our commissioners starting with the chairman tom wheeler who will kick it off then we'll go no alphabetical order of that with commissioner clyburn, o'rielly and commissioner pai and commissioner rosenworcel. >> thank you, mr. chairman. it's a privilege to be here with my colleagues. we're five type a individuals who have been working together for the public interest. let me make three quick observations in keeping with your three-minute rule. one the open internet decision, as you indicated is a watershed. your leadership, mr. chairman, has illustrated that there
really aren't any differences about this need to do something, as you said today. we need clear rules. there are different approaches to be sure. >> wireless is causing cancer and the fcc has been hiding it from everyone. suffering with brain injuries, breast cancer. >> you're subject to arrest! >> cancer. world health organizations classify -- >> order in the hearing room. >> world health organizations classify all of the wireless as the class 2 b cancer again. these aren't safety standards. >> sorry, mr. chairman. please proceed. >> thank you, mr. chairman. as i said, there are different approaches that we take to be sure and no doubt we'll be discussing those. we've completed our work, strong open internet rules will soon be
in place. but let me touch on a couple of other issues real quickly. one is that there's a national emergency in emergency services. congress holds the key to that issue. the vast majority of calls to 911 services now come from mobile. we had a unanimous decision of the commission just a few weeks ago to require 911 location capability from wireless callers. the carriers are stepping up. but delivering location information from the phone is only the front end of the problem. there is no national policy on how to maximize the life saving potential that is delivered as a result of the carrier's activity and our rules. there was a tragic example in georgia a few weeks ago, a lady
who was calling from a sinking car in the middle of a lake and her call was picked up by an antenna in a different public safety answering points jurisdiction. you can hear this heartbreaking conversation with her as she says where she is and the dispatcher keeps saying i can't find it because this other jurisdiction didn't have the maps as to where this woman was all because of the vagaries of how a wireless signal gets distributed. there is a real opportunity of 6,500 different public safety answering points are staffed by dedicated, qualified individuals but there is an absence of a federal program that recognized that mobile has changed the nature of 911. we can't just worry about a signal coming from the caller.
we have to worry about what happens to make sure that that signal is used. and just let me be clear on one thing. this is not an fcc paragraph. i don't care how this gets done, where it goes in terms of responsibility but we have a responsibility as americans to make sure that the information that we as a commission are requiring be transmitted get put to life saving uses and the congress has the ability to do something about that. my second quick issue. the broad band support that we recently -- rural america is falling behind. the disparity behind rural america, we are lacking high speed broad band. 53% of rural americans do. we tackled that part of that
with the e-rate modernization and the rural fiber gap for schools. 40% of public schools -- 40% of rural schools are without access to fiber. they now have alternatives under the new rules. the commission recently revised the support mechanism for price cap carriers an additional $1.8 billion from universal service funds that upgrade their activities in areas not participating began the process that would lead to an auction next year where alternative providers can step up and say no i will provide service in an experiment leading up to that have put $100 million out to actually test alternative pathways. we plan to act on rate of return carriers this year to create a voluntary path for those who elect to receive defined amount
of funding to deal with the tying of voice and broad band together which is a problem that they experienced, to deal with replacing the infamous qra. that is a process that would be greatly facilitated if stakeholders could agree on a common solution. so i thank you for the opportunity to be before you. i look forward to discussing any of the issues that you want to discuss as we go forward. >> thank you chairman wheeler. >> members of the committee good afternoon. my written statement details my views on some of the difficult decisions facing the fcc. for purposes of my oral summary, however, i will focus on just two. while i prefer competition over regulation the truth is that market place nirvana does not always exist and here are two examples where markets have failed and regularatory back stop is needed.
i made rule call completion a priority as acting chair because it is unacceptable in this day and age that calls are not being put through. we tackled this practice by prohibiting a ringing signal unless a call is actually completed and we have required carriers to retain and report call data. data collection rules go into effect april 1 and we will use this information to ensure that the fcc has the tools necessary to take additional action if appropriate. while a petition requested relief from egregious inmate calling rates remain pending at the fcc for nearly a decade fees and rates continue to increase. calls made by deaf and hard of hearing inmates topped $2.26 per minute. add to that an endless array of
fees. $3.95 to initiate a call. a fee to set up an account another fee to close an account. a fee to use a credit card. there is even a fee charged to users to get a refund of their own money. there are 2.7 million children with at least one parent incarcerated and they are the ones most punished and the down stream cost of these inequities are born by us all. the fcc adopted interstate rate caps in august of 2013 and what has been the result? despite dire predictions of losing phone service and lapses in security we have seen increased call volumes as high as 300% and letters expressing how this relief has impacted lives. i hope we answer the call with permanent rate caps and fees. for all of these customers this
summer. i am grateful for the opportunity to appear before you today and look forward to answering any questions you may have. thank you. >> thank you. >> thank you members of the committee for the opportunity to deliver testimony to you today. i have always held this committee in the highest regard given my past involvement as a congressional staffer with oversight hearings and legislative efforts. i recommit myself to being available and be any help in the future. in my time at the commission i have enjoyed many intellectual and policy challenges presented by innovative communication sector. it is my goal to maintain friendships even when fellow commissioners and i disagree and seek out opportunities to work together. to provide a brief snapshot i voted with the chairman on virtually 90%. it dropped to 62% for higher profile open meeting items.
one policy i am not able to support is commission in every aspect of the internet. the ends justify means approach [ inaudible ] without a shred of evidence that it is necessary. the order pawns authority to fcc staff to review current and future internet practices under vague standards such as just and reasonable, unreasonable interference and reasonable network management. this is a recipe for uncertainty for our nation's broad band providers and ultimately edge providers. i continue to suggest creative ideas to refleck the current market place often through my public blog. i advocated any document considered in open meeting should be made publically available to the website. under the current process i meet with numerous outside parties but i am precluded for telling
them having read the document that the concern is misguided or addressed. the stated objections to this approach presented on the cloak of procedural law are grounded on resistance to change. in addition the commission has questionable post adoption process that deserves significant attention. i generally reframe from commenting on legislation i appreciate ideas put forth which address these and other commission practices such as abuse of delegation that block public out of critical end stages of the process. i believe these proposed changes would improve functionality of the commission and improve consumer access to information. i have been outspoken on many issues such as need to free up resources for wireless broad band licensed and unlicensed. i look forward to working on this and other issues on the months ahead. i stand ready to answer questions you may have.
>> ranking member nelson and members of the committee, thank you for giving me the opportunity to testify this afternoon. it has been an honor to work with the members of this committee on a wide variety of issues. there is a particular privilege to appear before you today now that senator moran joined the committee. i can only hope his kindness will continue if and when he has a chance to question me later today. i last testified in front of this committee march 12 of 2013. since then things have changed at the fcc. i wish i could say the changes have been for the better but unfortunately that is not the case. the foremost example, of course, is the commission's decision to apply title 2 to the internet. the internet is not broken. the fcc didn't need to fix it.
our party line vote overturned a 20-year bipartisan consensus in favor of a free and open internet. with the decision the fcc voted to give itself the power to micromanage virtually every aspect of how the internet works. the decision will hurt consumers by increasing broad band bills and reducing competition. the order was not the result of a transparent rule making process. the fcc has already lost in court twice and its latest order has glaring legal flaws that are sure to keep fcc mired in litigation for a long time. turning to the designated entity program. the fcc must take immediate action to end its abuse. what once was a well-intentioned program designed to help small businesses has become a play pen for corporate giants. the recent aws 3 auction is a shocking case in point.
dish which has annual revenues of $14 billion and a market cap of $34 billion holds 85% equity stake in two kaechs claiming $3.3 billion in taxpayer subsidies. that makes a mockery of the small business program. the $3.3 billion at stake is real money. it could be used to under write over 580,000 pelgrants, fund school lunches for over 6 million children or incentivise hiring of over 138,000 veterans for a decade. the abuse had an enormous impact on small businesses from nebraska to vermont. it denied licenses they would have used to give rural consumers a competitive wireless alternative. in my view the fcc should adopt a ruling to close loopholes before the next option. members of the committee, thank you for giving me this
opportunity to testify. i look forward to answering questions and working with you and your staffs in the time to come. good afternoon members of the committee. today communications technologies account for one-sixth of the economy and they are changing at a breath taking pace. how quickly? well, consider this. it took the telephone 75 years before it reached 50 million users. to reach the same number of users television took 13 years and the internet took four years. more recently angry birds took 35 days. so we know the future is coming at us faster than ever before and we also know that the future involves the internet. and our internet economy is the envy of the world. it was built on a foundation of
openness and that is why i support network neutrality. with an eye to the future i want to talk about two other things today, wifi and the homework gap. first, wifi. a few of us go anywhere without our mobile devices in our palms pockets or purses. that's because every day in countless ways our lives are dependent on wireless connectivity. while the demand for air waves grows the bulk of our policy conversations are about increasing supply of licensed air waves for commercial auction. this is good but it is also time to give unlicensed spectrum and wifi its due. we should do that because wifi is, after all how we get online. wifi is also how our wireless carriers manage networks with license through offloading. wifi is a boon to the economy. there are studies that
demonstrate that it is responsible for more than $140 billion of economic activity every year and that's big. so we need to make unlicensed services like wifi a priority and the commission is doing just that with our work on the 3.5 band and next year with our work on the 600 mega hertz band. i think it will take more than this to keep up with demand. that is why i think the time is right to explore greater use in the upper portion. going forward we need to be on guard to find more places for wifi to flourish. second, i want to talk about the homework gap. today roughly 7 in 10 teachers assign homework that requires broad band access. but fcc data suggests as many as one in three households do not have access to broad band at any speed. so think about those numbers.
where they overlap is what i call the homework gap because if you are a student in a household without broad band today getting your homework done, just getting your homework done is hard. and it's why the homework gap is now the cruellest part of digital divide. it is within our power to bridge it. more wifi will help as will recent efforts to upgrade connectivity through e rate. with more work remains. i think the fcc needs to take a hard look at modernizing the program to support connectivity in low income households. i think the sooner we act the sooner we bridge this gap and give more students a fair shot at digital-age success. thank you. >> thank you. we have a lot of participation on both sides today. as much as we can trying to
adhere to the five-minute rule. i know it will be hard because there is a lot of interest in the subject. let me start by talking a little about an issue important to me and my state. i start by saying laws and policies that are outdated often lead to rules that are arbitrary which ultimately limits consumer choice and raises cost. the current universal service fund rules require a rural consumer to buy voice service in order for that carrier to be eligible for usf support. if the same rural consumer decides to buy only broad band services without a telephone subscription the carrier is no longer eligible to receive u.s. support for that line. this contradicts and under mines the mission of the new broad band centric usf and ask makes broad band more expensive and increasingly threatens sustainability of rural communications networks. last year senators led letters
to the commission that urged fcc to propose rules to solve the issue. nearly a year later the issue remains unsolved. i want to ask each of you a question. i will take the approach of chairman rockefeller and ask for commitment from each commissioner and the question is will you commit to solving this growing threat to rural communications by the end of this year? >> absolutely. >> yes. >> yes. >> yes. >> very good. thank you. >> wethis is designed to get all on the same side of an issue. i want to -- i want to make just an observation too. i know the commission's order is the subject of the day in addition to other things we would like to talk about, as well. i have a father who is 95 years old.
he lives in my hometown of myrtle south dakota with population of 500 people. he is a user of the internet. it strikes me if i had to suggest to my dad that we're going to regulate the internet that he uses with a law that was passed turg the great depression when he was 14 years old i think he would probably be flabbergasted. essentially that is what we are doing. we are trying to take something that was designed for a very different era and squeeze it trying to fit it into a modern technology. one of the issues that that statute allows for is rate regulation. now, i know that chairman you have contended that no rate regulation will result from open internet order. let's say hypothetically that someone files a complaint at the fcc alleging that the rates they are paying an internet service
provider for broad band service are not just and reasonable under section 201. as a result of title ii reclassification isn't the commission legally obligated to investigate and rule on that type of complaint? >> that is absolutely right. the order opens the door to complaints under section 208 to the commission and the country. it would be up to the commission to adjud kate whether or not a rate is reasonable. this limits to saying we don't engage in things line tariffs and says nothing but expost regulation. that is why rate regulation is a real prospect. >> so if that circumstance were to happen if the commission judges the rates to be unreasonable could the fcc require the isp to adjust its rates or impose fines on the
isp? >> we don't have such a case before us right now but i think it is important as an order of due process that any provider having difficulty succeeding in getting interconnection they need to provide service has opportunity to complain to the commission and seek resolution. >> so the answer is yes, the fcc could? >> we will see when we have a complaint before us. >> i'm not saying you should but i'm saying you could. >> in a rate complaint case how will the fcc decide if a rate is unreasonable or unjust? >> given the same context that you set up, one of the examples that i gave in my opening statement was on inmate calling. that affirms and should affirm to us all that the bar is incredibly high when it comes to the scenario that you put forth. we waited over ten years to think about addressing what was obviously a market failure. so again we won't know until
something is before us but it passes prologue that far is extremely high for that case to come to the resolution. >> you would have the discretion to determine if a rate is unjust? >> we have an obligation, i believe, to look at any complaint filed before us and make a decision accordly. >> if that conclusion is reached the fcc could in that circumstance act in a way that would adjust rates or impose fines? >> i jokingly say that even though i'm from the south and we have the other south, south carolina, and that we have been known very interesting people who have predicted the future i unfortunately do not have that talent. >> well, i have a hard time i would think explaining or how that process would not be rate
regulation. and like i said granted the chairman has said that something on which they would forebear but if you are -- if a case is brought forward strikes me that the fcc has an obligation to respond. and i also think that things that are decided by this commission certainly don't bind future commissions which is why we argued all along that working constructively on legislative solution is the best approach to doing this. my time is expired. senator nelson. >> chairman wheeler rate regulation regulation, unbundling, tariffing, these are things that some of the big corporations are quite concerned about. no doubt you have had
conversations with ceos of those corporations and you have explained what your order is. how did you explain it and what was their reaction? >> thank you, senator. so rate regulation, tariffing, unbundling those sections are all foreborn. i never knew what the past tense is on forebearance. we are not using them out of title ii. the point that senator thune was just making 1993 created section 332 of the communications act in the house which was sought by the wireless industry when they asked to be treated as title ii common carriers and to have
forebearance from parts of the act that are no longer appropriate in a nonmonopoly situation. that included specifically as a decision by congress section 201. so the kind of example that was just raised about section 201-b being some kind of back door into rate regulation has existed for 22 years in the wireless industry and the commission has not been confronted and has not acted in this kind of way that suggested some kind of back door regulation. in fact, what has happened is that with the absence of consumer rate regulation that industry has been incredibly successful. the wireless voice industry has had $300 billion in investment since then. it was that model that is actually more forebearance than was created for the wireless
industry that we patterned the open internet order on. so that it is not your grandfather's title ii. title ii has 48 sections. 27 of those sections we said we will not use which is 50% more than 22 years ago. so i think that the record is pretty clear that if we say we are not going to have consumer rate regulation we are not going to have tariffing, we are not going to have unbundling and we explicitly remove those sections and say we are not looking at those sections and pattern ourselves after something that has this kind of a two-decade record of not having these imaginary horribles happen that we are in pretty good course. >> things like transparency and
a host of other issues there is wide acceptance. >> so the interesting thing is that there are four regulatory actions in our order no blocking no throttling no pay prioritizuation and transparency which are the same things the legislation introduced contain those four. the isps run ads saying we are all for these. we would never think about doing these kinds of things. those are the four regulatories. the thing is that we also say and there should be a basic set of ground rules for things that nobody can anticipate that are not proscriptive regulatory saying we are smart therefore you will do this but are saying let's take a look. is that just and reasonable? is that in the consumer interest?
is that in the public interest? and on a case by case basis and the fascinating thing to me sir, is that the isps for years have been saying we don't want the fcc to have such broad rule making authority. they ought to be looking at things like the ftc on a case by case basis. now we come out and say we do something that is likely ftc on a case by case basis and everybody says that is terrible uncertainty. we don't know what it is if only they would be making rules and telling us what things were. you can't have it both ways. i think what we have built is common on four aspects. the only four regulatory aspects and says there needs to be a set of rules and needs to be a set of standards and needs to be a referee on the field who can throw the flag if somebody violates the standards. >> and i would just conclude, mr. chairman, by saying that certainly the five commissioners
in front of us would never do this kind of dastardly stuff but would a future commission do it? and the flip side of that -- and i would like you to comment, chairman wheeler -- what about the future ceos that presently you have confidence in them but what about someone that suddenly wants to go beyond the scope of your intent? >> so ceos come into me senator, and they say we trust you that we think you have -- we agree with everything but you are not wild and crazy. we think there will be decent responsible decisions but we trust you. what about the crazy person that will follow you some years down the road? my response is i feel the same
way about you, sir? you have said you would never do these kinds of dastardly things to the internet. what about the wild and crazy ceo who follows you? all we are trying to do is say let's have basic set of rules. is it just? is it reasonable? is there a referee on the field who can measure against that yard stick and throw the flag if appropriate? >> thank you senator nelson. senator fisher. >> thank you mr. chairman and ranking member nelson. chairman wheeler, there are a number of members of congress who believe that new technologies can help the united states remain innovative. i am working with senator booker on the internet of things. i think that is going to be a very good bipartisan resolution and moving forward hopefully legislation so we can see that
innovateers are able to grow businesses and able to solve problems with clear rules and also clear expectations. i think that's necessary that innovators have to have that certainty out there. when i look at the general conduct rule that is proposed that you have here i'm concerned it could jeopardize that regulatory certainty that i think we have to have if we are going to remain competitive. the electronic frontier foundation has described this rule as an overreach and confusing specifically the eff said the fcc believes it has broad authority to pursue any number of practices hardly the narrow light touch approach we need to protect the open internet. "wall street journal" reported that at a recent press conference you said with respect to the general conduct rule that, quote we don't really know. we don't know where things will
go next. the order says the agency will watch, learn and act as required, a process that is sure to bring greater understanding to the commission. so my question is how can any business that's trying to innovate have any kind of certainty that they're not going to be regular rated by the fcc under what i view as a very vague rule that you have here. for example, when will it be applied, what specific harms does the general conduct rule seek to address, that the rest of the president's open internet order doesn't capture? what are you after here? >> thank you senator. first of all i would like to identify myself as an entrepreneur, and as somebody who has started multiple companies, and spent the ten years before i came into this job as a partner at a venture capital firm investing in those
companies. and i know from my experience that the key to innovation is access. and when a gatekeepers deny access, innovation is stifled. that's what we want to avoid. we do not want to be in a situation where we are having proscriptive rules. we want to be and what we have structured is something that says, okay let's ask a couple of questions. what's the impact on consumers, of this action, what's the impact on content providers, those who want to be delivering. and what's the public interest. and i think we can probably all agree that nobody wants to sit by and see something evil happen to any three of those legs of the stool. and those are the tests. and we look and say, okay now, what happens on those three legs
of the stool with this kind of an action that we have had a complaint on. and the important thing is, as i was saying to senator nelson that this is not us saying we're so smart, we know what you should do this is specifically doing what the isps have been saying to us don't make rules, but rather look at things on a case-by-case basis. and that's what we've tried to build in, that kind of flexibility. >> but that flexibility, though, what do you do with these entrepreneurs and innovators that are coming up with things that i can't even imagine? >> right. >> and there's a process that they're going to have to go through, with the fcc that they don't know if they're going to be required to go through it or not. >> we don't move up the stack. we're talking about the delivery
services. we're not talking about regulating two guys and a dog in a garage and they have to get permission as to -- >> do you think that's clear? >> yes, ma'am. yes, ma'am. we're very clear on that and that is an essential component of this. first of all i mean, i think it's questionable what our reach would be, in terms of statutory authority. we're dealing with the delivery of what these creative people want to do and make sure they have open delivery. >> and if i could just switch gears here, in your testimony, i read that you're trying to move forward with a voluntary incentive auction no later than early 2016. >> yes ma'am. >> are you committed to that? >> yes, ma'am. >> okay. thank you. >> thank you, senator fisher. senator mccaskascaskill.
>> we've visited about this. the thing that's -- the rest of the story that was not explained was that not only was this a very big company using small businesses to get a $3 billion advantage, a $3 billion advantage, one of the entities that was used was an alaska native corporation, which if i think most people are aware, that they don't have any rules about being small. so it is insult to injury because alaska native corporations are multi-billion-dollar, multi-national corporations that get special deals under our law. they don't have to compete. they don't ever age out of the program. they never get too old for the program. they never get too big for the program. and you confront legally so this is really, i think outrageous. and i hope we can figure out a way to get to the bottom of it. i want to talk about lifeline a little bit. i've visited with many of you about lifeline. i think it is a program that
began under, i believe, president reagan, president bush, you know, it was a subsidy. it morphed into a program without any kind of controls without any kind of regulation. and it was a mess. now, i know we've had some -- we've had some enforcement, but i know we've had a pilot program on expanding it to broadband. let me ask you first, chairman wheeler, when will the report on the pilot program be available? >> senator, i can't give you the specific date but it's in the next couple of months. >> well we had some enforcement. there hasn't been much in a year. there's a list of reforms, i think, that include -- and if any of you disagree with any of these reforms, if you would speak up for the record, i would appreciate it. taking eligibility and determination out of the hands of carriers? competitive bidding? making sure consumers have some
skin if the game? placing a cost cap on the program? anybody disagree with those four reforms? okay i would like to see those instituted and i would like a discussion from you about whether or not it makes sense to continue the lifeline program. doesn't it make more sense to make it a broadband program? looking at the homework gap, looking at the capability of making calls. over the internet. does it make sense to institute these structural reforms, as we transition this, from a program where no one has skin in the game and we have allowed the carriers to commit massive fraud in this country. doesn't it make sense to convert this whole program over to broadband? and i would love your take on that. >> i'm not sure who you're -- >> any of you if someone would speak up i would love somebody
to speak up who disagrees with doing it. >> well, i was showing my southern graces. i cannot sit before you and say you need that. one of the things i'm adamant about. i put four five principles last year. one of which is the most important, that would get to the heart of some of the problems we're having is getting the companies out of the eligibility game. they should not be in that space. when it comes to grocery stores do not setter or have people eligible, you know, for s.n.a.p. they're not in that game. doctors do not qualify people for medicaid. it should be an independent arm. and i truly believe that a lot of the issues that have plagued this program, if we take them
out of that would go to the heart of what we're seeing. please. >> i wanted to -- commissioner pie and commissioner o'reilly i've had an opportunity to talk to the chairman about this idea. would you be willing to work with the democratic commissioners on a program that had controls and had reforms in it, that transitioned over to a broadband program? >> absolutely. and as you may know, i actually wrote recently about this issue put forward some of my principles and reform. and i thought it would be helpful to start in a review of existing program and all the issues that it's faced, before we go to the broadband, expand the program to broadband. that hasn't seemed to be where the direction, where we've been getting the signals internally. i've tried to put forward reforms that i would think we could do going forward. i think we should have that fundamental conversation on the reforms that should be in place before we go there. >> or maybe there in lieu of? >> i would be open to that as well. >> senator, first, i want to thank you for your leadership on
issues that actually see fiscal responsibility, including the aws-3 auction and lifeline. with respect to lifeline with regard to broadband i think it's critical to learn the lessons from the pilot. secondly, i've put forward in a speech citizen against government waste, a number of different principles for reform, including some of the ones you've talked about. and i think it's critical for us to institute those first to ensure that the program's on a stable footing. because, remember, the lifeline program is the only one of the four universal service fund programs that is not capped. so if we don't have those basic reforms for the process, as this program stands if we expand it to include broadband, there's no telling what kind of problems we might encounter. >> sure. in 1985, when ronald reagan was in the white house, that's when we started this program. it was last updated during the bush administration. it is time to modernize this program along the lines you described, make sure it is free of any waste, fraud, and abuse. and then make it address
broadband and things like we described the homework gap. >> all right, great. >> and this is not a question of how do we take what's there now and just do a paste here or a change there. we have to look at this entire program, soup to nuts and say, wait a minute, this started in a twisted pair environment, met metamorphosised into a mobile environment. we now live in a broadband environment. why in the world are we sticking with the decisions of the past? >> right. great, thank you, all. >> thank you, senator mccaskill. senator heller try to keep it to five, if you can. >> thank you mr. dharm. thank you for calling this hearing. i have a statement for the record i would like to submit. i want to thank you the chairmans for being here and chairman, thank you also for attending. today what i would like to focus on is how rules are adopted. and commissioner